As NJ Reels from Rising Electricity Costs, New Battery Funding Offers a Way Forward

Last summer, we sounded the alarm: a seismic event for electricity costs was underway in New Jersey and the broader mid-Atlantic region, and businesses were going to feel it in a significant way. That rate shock has now fully materialized on utility bills statewide.

Across the state, commercial and industrial electricity costs shot up between 2024 and 2025, with double-digit rate increases in many utility territories – including a 16% single-year rate increase in PSE&G, the state’s largest utility. It’s not just a blip either, instead reflecting a structural shift in the regional electricity market that isn’t going to shift back anytime soon.

Advanced microgrids that incorporate battery storage (potentially paired with solar) offer a powerful tool for businesses to fight back, with optimized dispatch algorithms that can target energy use during the precise hours that are breaking corporate energy budgets – without impacting operations. 

In a recent webinar, experts from Scale walked through the challenges facing our New Jersey customers, the unique power of battery storage solutions to address them, and the incentives the state is rolling out that can make these systems even more valuable. Fill out the form below if you want to view the webinar, which includes insights from our regulatory expert on how to qualify for these incentives, or read on for a high-level summary.

Why Are NJ Rates Going Up? (And UP)

Electricity bills include multiple components, including supply charges, demand charges, and capacity charges – and all three have been moving in the wrong direction. After increasing at a pace of about 1% per year from 2005-2020, average electricity rates across New Jersey have been increasing by 6% on average since 2020, driven by a steady increase in investments in aging utility grids and elevated natural gas prices since Russia’s invasion of Ukraine and the subsequent boom in U.S. LNG exports. 

But the even faster acceleration we've seen in the past year, and that we’re likely to see going forwards, is about capacity. Capacity charges are calculated based on your facility's electricity usage during a small number of critical peak hours each year. Think of it as a bill for the amount of supply on the transmission grid that has to be kept available for you during the moments of highest system-wide stress. When grid capacity gets tight – and, thanks to a combination of rapidly-increasing demand (due in part but not entirely to data center growth) and retirements of aging fossil fuel power plants, it has suddenly gotten very tight – those charges spike.

The regional PJM capacity market, which covers New Jersey and much of the mid-Atlantic, saw average auction prices jump from roughly $90 per megawatt-day over the prior 15 years to over $300 over the past three years. Those prices began to kick in last year, and are now locked in through at least 2028. And with electricity demand continuing to surge from data centers and new industrial loads, and with new supply facing years-long interconnection queues, these elevated prices are expected to persist for the foreseeable future.

These higher prices would be (slightly) easier to swallow if the grid was becoming more reliable – but that’s a tall order given the challenges utilities are facing. New Jersey businesses face ongoing risks of outages caused by increasingly-frequent extreme weather events like nor’easters and tropical storms. In 2018 and again in 2020, major weather events knocked out power for more than a million utility customers for hours or even days at a time, and the next major storm is always just around the corner.

And in some areas, businesses also have to contend with “blue sky” failures of the aging distribution network can result in multiple outages per year in some areas. For the growing number of businesses in industries like manufacturing and food processing that rely on increasing levels of automation, even losing power for a few seconds can cause tens or hundreds of thousands of dollars of direct and indirect costs. 

The combined effect: businesses are paying significantly more for power with no guarantee of greater reliability, undercutting their bottom line and hurting their competitiveness. 

Batteries: Built for the Moment

Given these utility rate dynamics as well as perennial reliability challenges, microgrids with battery storage have become a compelling opportunity for many New Jersey businesses. The unique ability of batteries to store energy that can be used to replace use of the grid during certain times of the day, month, and year makes them uniquely valuable for addressing the specific rate structure changes driving these increases.

The capacity charges that are adding hundreds of thousands of dollars annually to large facilities' bills are calculated based on peak usage during a handful of hours a year that can be predicted using algorithms that analyze factors like historic demand patterns, weather, and current grid conditions. Battery storage, dispatched intelligently, can dramatically reduce your measured load during exactly those hours – without any change to your operations. The battery meets your needs so the grid doesn't have to, and your “capacity tag” comes down accordingly.

The same logic applies to demand charges, which are driven by your peak usage hour every month. Like capacity charges, it’s based on your level of electricity consumption at certain times, but it’s based on your peak demand, not how much you use when the grid is at peak demand, and it’s used for investments in your local distribution grid infrastructure, not regional PJM-level  supply. Those differences aside, batteries are similarly capable of smoothing out your demand peaks to minimize these charges – and an experienced microgrid operator can ensure that these savings are optimized alongside annual capacity charge savings.

Batteries also enable advanced microgrids to provide enhanced reliability performance, with solid-state electronics that can detect a failure on the grid and activate full backup power support in milliseconds. Unlike traditional backup generators that typically take 30 seconds or more to ramp up – or more if they’re manually operated – these batteries, when properly integrated with microgrid controls, can ensure sensitive operations never skip a beat when an outage hits. When you consider how the costs of routine short outages can add up, this capability can be even more valuable than utility bill savings.

In our webinar, we walked through the math on how this value stacks up, including a real-world case study from a large commercial facility that illustrates the benefits on both the cost savings and reliability side. We're not sharing those details here — but they're worth seeing. Request the recording to dig in.

New Incentive Supercharges Savings

Here's where the timing gets even more interesting for NJ businesses. New Jersey has mandated 2,000 MW of energy storage by 2030, and the state's Board of Public Utilities (BPU) is rolling out a new incentive called the Garden State Energy Storage Program (GSESP) that would directly benefit commercial and industrial installations that install batteries. When we first called it out last summer, this program was still a work in progress, but recent announcements have made it clear that BPU is ironing out the final details and could open up to applicants before the fall. 

The program will include both an up-front incentive to lower installation costs as well as ongoing performance-based incentives that would pay batteries to support the grid during times of peak demand. We’ve seen similar incentive structures in other northeastern states, and based on what we’ve seen in the latest BPU proposals, this incentive could be lucrative enough to make the value proposition of battery microgrids even more compelling for NJ businesses. 

We're not going to get into all the details here – that's covered in the webinar – but this much is clear: the funding is limited, it will be allocated on a first-come, first-served basis, and the program is launching soon. Projects that are ready to apply when blocks of incentive capacity become available will have a meaningful advantage over those that are still in early planning stages.

Why Acting Now Matters

Energy costs in New Jersey are not heading back to where they were. The rate environment that produced a 16% single-year PSE&G rate increase is the same one that will shape bills in 2026, 2027, and beyond. Every month that passes without a battery in place is a month of foregone savings – and, for businesses that want access to the new GSESP incentives, every month that passes without a plan for an installation risks missing out on this year’s allocation of funding.

Scale's business is built around making this as straightforward as possible for our customers. We design, build, own, and operate these systems under a Microgrid Service Agreement (MSA) that requires $0 down, with a fixed monthly fee that's structured to deliver cost savings from day one. We handle the complexity – the engineering, the incentive applications, the ongoing optimization – so your team doesn't have to.

To learn more, watch the full webinar by filling out the form below, including the program details, eligibility requirements, and case study, or reach out directly to talk through your facility's situation. Whether you're just starting to think about what battery storage could mean for your facility, or you're already tracking the GSESP and want to understand how to position your project, we'd welcome the conversation.